Who Maintains Market Order in Cryptocurrency Trading? An In-Depth Look at How Market Makers Operate

Why Is Liquidity So Critical?

In cryptocurrency trading, have you ever wanted to buy or sell a certain coin quickly but found the order book empty? This is when you realize the importance of Market Makers. These professional traders and institutions act as the lubricant of the market, continuously providing buy and sell quotes to ensure smooth trading.

What would a market look like without Market Makers? Traders would face widened bid-ask spreads by multiple times, extreme price volatility, and even the inability to execute large orders. It is precisely the existence of these market makers that maintains liquidity and stability in the crypto ecosystem.

Who Exactly Are Market Makers?

In the crypto world, Market Makers are professional traders, institutions, or algorithmic trading systems that provide liquidity by constantly placing buy and sell orders. Unlike ordinary traders aiming to “buy low and sell high,” Market Makers primarily profit from the bid-ask spread—that is, the small difference between their buy and sell prices.

Major financial institutions, hedge funds, and professional trading firms (such as Wintermute, GSR, Amber Group, etc.) dominate the market-making space. Retail traders can also participate on a smaller scale by placing limit orders, contributing liquidity to the market.

How Do Market Makers Operate in Practice?

Imagine a specific scenario:

Step 1: Creating Opportunities with Orders

• A Market Maker places a buy order for Bitcoin (BTC) at $100,000
• Simultaneously, they place a sell order at $100,010
• The $10 difference is their profit margin

Step 2: Continuous Trading

• A trader accepts the $100,010 sell price, completing a sale
• Immediately, a $100,000 buy order is added to maintain order book depth
• While each individual spread seems small, thousands of such trades accumulate into significant income

Step 3: Risk Management Is Essential

• Market Makers cannot blindly accumulate a certain asset
• They hedge positions across multiple exchanges to mitigate price volatility risk
• Many top market makers use high-frequency trading (HFT) algorithms, executing thousands of trades per second to adapt quickly to market changes

Step 4: Intelligent Decision-Making

• Modern Market Makers rely on sophisticated trading bots
• These bots adjust bid-ask spreads in real-time based on order book depth, market volatility, and trading flow
• The goal is to find the optimal balance between risk and profit

Who Are the Takers, and How Do They Differ from Market Makers?

Understanding the difference between Market Makers and market participants helps you better grasp market dynamics.

Market Makers: Liquidity Providers

• Place orders in advance and wait for counterparties to trade
• Increase order book depth through limit orders
• Maintain buy and sell quotes over the long term
• Profit from accumulating bid-ask spreads

Takers (Market Participants): Immediate Executors

• Fill orders at the current market price immediately
• Remove existing liquidity rather than add it
• Seek quick entry and exit
• Usually pay higher fees (due to the bid-ask spread loss)

For example: A trader wants to buy BTC immediately at $100,010. They accept the existing sell order from a Market Maker, completing an instant trade. The Market Maker profits from the spread in this transaction.

Market Balance Is Crucial

• Market Makers ensure there are always orders available for execution
• Traders’ execution needs keep Market Makers’ orders matched
• A good balance results in low slippage, deep order books, and low trading costs

Leading Crypto Market Makers in 2025

Wintermute: A Global Liquidity Giant

Wintermute is a leading algorithmic trading firm, managing approximately $300 million in on-chain assets as of February 2025, across more than 30 blockchains. The company provides liquidity on over 50 crypto exchanges worldwide, with a cumulative trading volume approaching $6 trillion in November 2024.

Advantages

• Coverage of centralized and decentralized exchanges
• Advanced algorithmic trading strategies
• Strong industry reputation

Limitations

• Highly competitive environment
• Less focus on niche tokens
• Limited support for very early-stage projects

GSR: A Decade of Deep Market Expertise

GSR has over ten years of experience in crypto markets, offering market-making services, OTC trading, and derivatives. As of February 2025, it has invested in over 100 crypto companies and protocols, providing liquidity to more than 60 exchanges globally.

Advantages

• Deep liquidity across multiple exchanges
• Proven industry standing
• Focused on token issuance and ongoing liquidity management

Limitations

• Mainly targets large projects
• Custom solutions are costly
• Less suitable for small or micro projects

Amber Group: AI-Driven Trading Power

Amber Group is known for its AI technology and compliance focus. As of February 2025, it manages about $1.5 billion in trading capital for over 2,000 institutional clients. Its global trading volume exceeds $1 trillion, providing liquidity on multiple exchanges.

Advantages

• AI-powered trading systems
• Comprehensive financial services suite
• Emphasis on risk management

Limitations

• High entry barriers
• Broad business scope, not solely market-making
• Less suitable for emerging or small projects

Keyrock: Precision Algorithm Operators

Founded in 2017, Keyrock manages over 550,000 daily trades across 85 exchanges and more than 1,300 trading pairs as of February 2025. They offer market-making, OTC, options trading, and liquidity pool management.

Advantages

• Algorithmic trading and liquidity optimization
• Custom solutions for different regulatory environments
• Data-driven liquidity allocation

Limitations

• Relatively limited resources
• Less well-known compared to industry giants
• Custom services are costly

DWF Labs: Dual Engine of Investment and Market Making

DWF Labs combines Web3 investment and market-making, managing a portfolio of over 700 projects, supporting more than 20% of the top 100 projects on CoinMarketCap and over 35% of the top 1000. They provide spot and derivatives liquidity on over 60 top exchanges worldwide.

Advantages

• Provides both market liquidity and investment support
• Competitive OTC solutions
• Invests in early-stage projects

Limitations

• Only partners with top-tier projects
• Strict evaluation processes
• High entry thresholds

How Do Market Makers Change the Fate of Exchanges?

1. Surge in Liquidity

Market Makers continuously place buy and sell orders, ensuring exchanges have sufficient trading volume and order depth. This means large trades can be executed smoothly without causing price crashes.

Imagine: Without Market Maker support, a trader trying to buy 10 BTC at once might push the price up by hundreds or thousands of dollars due to lack of sell orders. With a market maker backing, enough liquidity absorbs this large order, keeping prices stable.

2. Taming Volatility

Crypto markets are inherently volatile, but Market Makers stabilize prices by dynamically adjusting bid-ask spreads.

• During downturns, they act as buyers to support prices and prevent free fall
• During bull runs, they maintain asset supply and curb excessive surges

This balancing act is especially critical for low-market-cap tokens.

3. Improving Market Efficiency

Market Makers facilitate price discovery—that is, asset prices are determined by real supply and demand rather than speculation or illiquidity.

Effects include:

• Narrower bid-ask spreads, lower trading costs
• Quick order execution, allowing traders to enter and exit rapidly

4. Win-Win for Traders and Exchanges

• Liquid markets attract retail and institutional traders
• Increased trading volume directly boosts exchange fee revenue
• Exchanges often collaborate with Market Makers to support new listings, ensuring immediate liquidity for new assets

By maintaining stable, liquid, and efficient markets, Market Makers help exchanges stay competitive globally.

The Real Risks Facing Market Makers

While Market Makers seem to enjoy stable profits, there are multiple hidden risks.

Market Volatility Risks

Crypto markets are unpredictable; rapid price swings can cause unexpected losses. Especially when holding large positions, swift market movements may prevent timely order adjustments, leading to losses.

Inventory Risks

Market Makers need to hold substantial crypto assets to provide liquidity. If these holdings’ values plummet, losses can be severe. This risk is greater in low-liquidity markets where price swings are more extreme.

Technical Failures

Market Makers rely on advanced algorithms and high-frequency trading systems. Any technical malfunction, system error, or cyberattack can disrupt trading strategies and cause financial losses. Network delays may result in orders executing at unfavorable prices, especially dangerous in fast-moving markets.

Regulatory Changes

Crypto regulations vary by region; sudden legal changes can impact market-making activities. Some jurisdictions may even consider market-making as market manipulation, leading to legal consequences. For Market Makers operating across multiple countries, compliance costs can be substantial.

Conclusion: The Indispensable Role of Market Makers

Market Makers are an irreplaceable part of the crypto trading ecosystem. Their provision of liquidity and stability enables traders to enter and exit markets quickly and efficiently. Their presence ensures the healthy operation of the entire market.

However, in reality, Market Makers also face market volatility, technical challenges, and regulatory uncertainties. As the crypto market matures, their role will become even more vital—they need to manage risks while continuously optimizing liquidity supply, pushing the industry toward a more professional and reliable future.

Understanding how Market Makers operate can help traders better grasp market dynamics and make more informed trading decisions.